Kinh tế học - Chapter 15: Sustainability and the natural environment

© 2015 Cengage Learning1Chapter 15Sustainability and The Natural Environment© 2015 Cengage Learning2Learning OutcomesDiscuss the concept of sustainability, and compare and contrast it with environmentalism.Describe ten major natural environment issues.Describe the NIMBY and its impact on environmental problems.Discuss the roles that business and government play in environmental issues.Explain the concept of environmental ethics.© 2015 Cengage Learning3Chapter OutlineThe Sustainability ImperativeThe Natural EnvironmentA Brief Introduction to the Natural EnvironmentThe Impact of Business upon the Natural EnvironmentResponsibility for Environmental IssuesThe Role of Governments in Environmental IssuesOther Environmental StakeholdersBusiness EnvironmentalismThe Future of Business: Greening and/or Growing?SummaryKey Terms© 2015 Cengage Learning4Sustainability and the Natural EnvironmentSustainability -Business that meets the needs of the present without compromising the ability of future generations to meet their own needs.Akin to walking lightly on the earth, taking only what’s needed, and leaving behind enough for future generations to have access to the same resources.Sustainability means running the global environment – Earth, Inc. – like a corporation: with depreciation, amortization and maintenance accounts.Keeping the asset whole, rather than undermining your natural capital. © 2015 Cengage Learning5The Sustainability Imperative (1 of 2)Businesses used to label the environment an externality and paid no attention to the damage they caused. Now, it requires action, both a necessity, and an opportunity. CERES identifies several key drivers:Competition for resources - demand is growing more quickly than they can be replaced.Climate change - business must be prepared to respond to new policies regarding emissions, and to take advantage of new technology.Economic globalization - wide disparities in social and environment standards bring risks and opportunities.Connectivity and communications - stakeholders can monitor and react to sustainability efforts more quickly. Reputations are quickly built and destroyed. © 2015 Cengage Learning6The Sustainability Imperative (2 of 2)A leading advocate of business sustainability is Unilever. The CEO sought out long-term investors as shareholders, rather than short-term hedge-fund managers, banned quarterly earnings reports, and embarked on a 10-year plan. As of 2012, Unilever had:Health & Hygiene – reached 224 million peopleImproving nutrition – a majority of products met national standards, with 18% meeting highest nutritional standardsGreenhouse gases – impact was reduced by 6%Waste – impact per consumer was reduced by 7%© 2015 Cengage Learning7The Natural EnvironmentFor years, businesses conducted their operations with little concern for environmental consequences. They consumed significant amounts of materials and energy, causing waste accumulation and resource degradation.They caused major air, water and land pollution problems. They looked the other way, labeling the negative consequences of their actions as externalities – side-effects or by-products not intended, and often disregarded. Any environmental effort usually came from compliance or efficiency. Businesses would stop damaging the environment only when it became illegal or unprofitable to do so. Now, environmentalism is becoming profitable.© 2015 Cengage Learning8A Brief Introduction to the Natural EnvironmentThis chapter focuses on the natural environment – what it is, why it is important, how it has become a major concern, and what businesses and other organizations have done to it or for it. The environment has become one of the most significant societal issues of our time.To help you make environmental business decisions in the future, we’ll describe the variety of responses humans and businesses have developed to address these issues, and present facts and figures.The emphasis is on two themes:Humans are part of their natural environmentThe environment is complex, defying simple analyses© 2015 Cengage Learning9Glossary of Environmental Terms Bio-based ProductA product composed of biological products or renewable agricultural or forestry materials.EnvironmentExternal living, working, and playing spaces and natural resources and more.Carbon FootprintThe amount of greenhouse gases one emits.Carbon neutralMaintaining a balance between producing and using carbon dioxide.Carrying capacityVolume and intensity of use by organisms that can be sustained Entropy A measure of disorder of energy indicating its unavailability for recycling for the same use. © 2015 Cengage Learning10EcosystemAll living and nonliving substances present in a particular place, interactingIrreversibilityThe inability of humans and nature to restore environmental conditions to a previous state.The Impact of Business on the Natural EnvironmentThe Top Ten fundamental environmental issues:Climate ChangeEnergyWaterBiodiversity and Land UseChemicals, Toxics, and Heavy MetalsAir PollutionWaste ManagementOzone Layer DepletionOceans and FisheriesDeforestation© 2015 Cengage Learning11Climate ChangeClimate change global warming creates the:Greenhouse effect - the prevention of solar heat absorbed by our atmosphere from returning to space, causing an unprecedented rate of warming.Hurricane Katrina, a European heat wave, and starving polar bears are all signs of warming.The probability that humans are changing the climate is greater than 90%.The U.S. Chamber of Commerce opposes controlling emissions which contribute to climate change. Some CEOs felt so strongly about this that they quit the U.S. Chamber. Nearly all legitimate scientists fear the possibility of swift and radical climactic changes.© 2015 Cengage Learning12Global Carbon Dioxide Emissions© 2015 Cengage Learning13EnergyA major environmental issue is energy inefficiency, wasting nonrenewable sources of energy.Fossil fuels such as coal, oil and natural gas were formed millions of years ago under unique conditions; once they are depleted, they will be gone forever. Because such fuels are not equally distributed around the world, disastrous armed conflicts result. Businesses should use as little non-renewal energy as possible, and shift to renewable sources such as solar, wind, hydroelectric, biomassEnergy represents a challenge and an opportunity; firms that succeed in this area will reap big profits. © 2015 Cengage Learning14WaterBoth quality and quantity of water endangered. Quality – Degradation of oceans & waterwaysMunicipal sewage, Industrial wastesUrban runoff, Agricultural runoffAtmospheric fallout, OverharvestingDam sedimentation, DeforestationOvergrazing, Over-irrigationMore than a billion people lack clean water.Quantity – Earth is a closed system with a fixed water supply; growing populations use more water. The world is facing water bankruptcy.© 2015 Cengage Learning15Biodiversity and Land UseBiodiversity - The variation of life forms inside an ecosystem, serves as a key indicator of its health. It is being lost at an unprecedented rate.Ecosystem and habitat destruction, pollution, other excesses in individual and organizational activities are responsible.The current rate of extinction is 1,000 times higher than the natural rate. Land degradation threatens the livelihood of more than one billion people, especially in Africa, the continent most affected by drought.© 2015 Cengage Learning16Chemicals, Toxics and Heavy MetalsToxic substances - Chemicals or compounds that may cause damage to the nervous system, reproductive and developmental problems, cancer and genetic disorders - & the environment. Can be intentionally or unintentionally created.Two main problems - We are not always aware of the effects of exposure to chemicals.Toxic substances can be associated with industrial accidents, causing unforeseen widespread biological damage.© 2015 Cengage Learning17Air PollutionOutdoor Air pollution - Acid Rain Global WarmingSmogDepletion of the ozone layerSerious respiratory illnessesIndoor Air Pollution – Comes from oil, gas, kerosene, coal, wood and tobacco products, building materials & furnishings, damp carpets, household cleaning products and lead-based paints.Long term effects , respiratory diseases, heart disease and cancer, can be fatal.© 2015 Cengage Learning18Waste Management© 2015 Cengage Learning19Waste Trends in the U.S.© 2015 Cengage Learning20Ozone DepletionOzone depletion - Ozone is harmful near the surface of the earth, but vital in the atmosphere.It blocks dangerous ultraviolet radiation from the sun.Decrease in stratospheric ozone comes from human use of chlorofluorocarbons (CFCs) and other chemicals.The ozone hole in our atmosphere has been greatly reduced since 1993. © 2015 Cengage Learning21Oceans and FisheriesWatershed - an area that drains to a common waterway. We all live in a watershed. Trillions of gallons of sewage & industrial waste are dumped into marine waters each year.These & other pollutants do significant damage coastal ecosystems, resulting in shellfish bed closures, seafood-related illnesses, and reduced shoreline protection from floods and storms. Once inconceivable, now 85% of the world’s fisheries are at capacity, over capacity or have collapsed. The oceans are running out of fish to meet human needs.Conservation efforts have helped some species recover, and such efforts continue.© 2015 Cengage Learning22DeforestationHumans depend on forests for building materials, fuel, medicines, chemicals, food, employment and recreation.Deforestation - Adds to soil erosion problems. Plays a key role in global warming; Felled trees can no longer absorb carbon dioxide. Dead trees release it into the atmosphere. Accounts for 20% of global carbon emissions – more than the world’s trains, boats and planes combined. © 2015 Cengage Learning23Responsibility for Environmental IssuesWicked problems - (smog, toxic waste and acid rain) are problems with complexity, uncertainty, interconnectedness, ambiguity, conflict, and societal constraints. When no one takes responsibility - Tragedy of the commons – is likely to occurA “commons” (our environment) is a plot of land available to all.Constraints must be placed on the use of the commons because self-interest is likely to lead individuals and organizations to behave in ways that will not sustain our shared resources.© 2015 Cengage Learning24Environmental EthicsHumans must consume at least some plants and water to survive. What level is ethical? Which school of environmental thought should we apply?Kohlberg – levels of moral developmentUtilitarianism – greatest good for greatest numberIntegrating sustainability into a firm’s philosophy is a natural extension of stakeholder theory, including as a stakeholder the ecological system from which the firm obtains resources and to which it bears responsibility for its impacts, both positive and negative. © 2015 Cengage Learning25The NIMBY ProblemNot in my Backyard: NIMBY - Reflects human denial of responsibility for misuse of the environment.Entities causing environmental pollution are not identified as the sources of the problem, so no action is taken.A NIMBY attitude avoids or denies the root cause of the damage.One popular cartoon pictures a stream of polluting, honking cars passing along the highway in front of a billboard that reads: “Honk if you love the environment.”© 2015 Cengage Learning26The Role of Governments in Environmental IssuesGovernments have played major roles in environment issues: developed habitable lands, protected, taxed and zoned natural environment-based areas, and exercised regulatory control over how those environments could be used. © 2015 Cengage Learning27Responses of Governments in the United States (1 of 5)National Environmental Policy Act (NEPA, 1970) permit required for discharge of hazardous waste into navigable watersrequires federal agencies to prepare Environmental Impact Statements (EISs)Environmental Protection Agency (EPA, 1970)An independent agency to research pollution problems, aid state and local government efforts, and administer many federal environmental laws© 2015 Cengage Learning28Responses of Governments in the United States (2 of 5)Air Quality Legislation – The Clean Air ActSets standards and timetables for implementationCreated Emissions trading (Cap and trade)Intended to reduce a particular pollutant over an entire industrial region by treating all emission sources as if they were beneath one bubble. A business can increase its emissions in one part of a plant or region if it reduces its pollution by as much or more in another part of the plant or region.Businesses that reduce their emissions can trade them to other businesses, earning income.© 2015 Cengage Learning29Responses of Governments in the United States (3 of 5)Water Quality Legis. – The Clean Water ActInvolves both state and federal governmentsGoal: to achieve water quality safe for humans, and protection of fish, shellfish and wildlifeBanned discharge of pollutants into navigable waters through pollution permit systemSet timetables for installation of state-of-the-art pollution control equipment. Marine Protection , Research & Sanctuaries Act set a similar system for coastal watersThe Safe Drinking Water Act of 1974 establishes maximum contaminant levels for drinking water. © 2015 Cengage Learning30Responses of Governments in the United States (4 of 5)Land-Related Legis. – Solid Waste Disposal ActState and local governments mainly responsible Resource Conservation & Recover Act set up a regulatory system for tracking hazardous wasteToxic Substances Control Act requires businesses to identify chemicals posing substantial risks. Superfund (CERCLA) places responsibility for remediation of hazardous waste dumps Emergency Planning and Community Right-to-Know Act requires manufacturers to report annually all of their releases into the environment of any of more than 500 toxic chemicals © 2015 Cengage Learning31Responses of Governments in the United States (5 of 5)Endangered Species – World’s species are disappearing at an alarming rateNearly 11,000 species near extinction; another 2,300 are endangered; 5,000+ more are vulnerableThere is still time to save (only) a majority if enough resources are committed immediately.Endangered Species Act (1973)Prohibits harm to endangered and threatened speciesMay require moving the species to another location or restricting threatening business activities, resulting in intense political conflicts between business and environmental groups© 2015 Cengage Learning32International Government Environmental Responses (1 of 2)United Nations Environmental Programme (UNEP) – has led the way in identifying global environmental problems and resolutions:Montreal Protocol, 1987 - by which most CFC-producing nations agreed to a quick phase-out of these ozone-destroying substances. This was the first UN treaty to achieve universal ratification. Global Waters Assessment – examines problems and policy options re the problems of shared transboundary waters© 2015 Cengage Learning33International Government Environmental Responses (1 of 2)Rotterdam Convention – requires that countries give explicit informed consent before hazardous chemicals cross their bordersGlobal Compact – joins firms across the world to support environmental and social principles. Global Reporting Initiative (GRI) – a collaborating center of the UNEP. GRI developed a sustainability reporting framework, now the most widely used standard in the world; outlines principles and indicators that organizations can use to measure and report their economic, environmental and social performance. © 2015 Cengage Learning34Other Environmental Stakeholders© 2015 Cengage Learning35Environmental Interest Groups – A collection of nonprofit membership and think-tank organizations has moved the world in the direction of environmental responsibility. Known as “the environmental movement,” they are responsible for the “greening” of nations.Environmental interest groups have evolved, and have been instrumental in significantly influencing business environmental policy.Examples: Environmental Defense is working with Federal Express on building a new generation of vehicles; with DuPont on developing nanotech standards; with PHHH Arval on becoming the first carbon neutral fleet. Environmental Groups Based on Cooperation with Business© 2015 Cengage Learning36Ecoterrorists & Green PeopleA new category of activists are ecoterrorists. They are different from the radicals, because they employ violence to achieve their goals. Ecoterrorism is criminal. Green consumers - actual and potential customers of retail who express preferences for environmentally-friendly products and services.Green employees - play a major role in promoting environmentalism at work.Green investors – people and organizations who prefer to invest with firms that are associated with environmentally-oriented companies. A growing number of bond offerings, money market fund and other financial instruments now include environmental components. © 2015 Cengage Learning37Business EnvironmentalismThese firms cared about the environment before caring about the environment was “cool.”Patagonia – Recycled decades before othersMade its outdoor gear out of old plastic soda bottlesSwitched to organic cotton when it was rare; cotton sales grew 25%, and an organic cotton industry thrives today; and much more3M Company – adopted a sustainability programBegan a pollution prevention program 30 years agoDeveloped a replacement for CFCs, and profitedIn 15 years, cut organic air emissions by 95%, toxic releases by 94%, and greenhouse gas emissions by 45%; and much more© 2015 Cengage Learning38Business and Environmental Activist PartnershipsThe shift in the relationship between business and environmental activists is represented by the case of Adam Werbach, once the youngest president of the Sierra Club, and Walmart, a company he once called “a new breed of toxin.” With Werbach, Walmart lowered energy use, but the reaction to their partnership was intense. Werbach, who had been a leader in the environmental community, was shunned. He was fired by his small consulting firm, old friends would not speak to him and he was threatened by strangers. But both parties remained committed to the partnership. Werbach showed that it was possible for business and environmental activists to work together. Today, examples are everywhere. © 2015 Cengage Learning39Systematic Business Responses to the Environmental ChallengeVarious management approaches are available for use in selecting or constructing an environmental strategy, including: Crisis management – focus on prevention and contingency plansIssues management – track public interest and develop plans to minimize problems Stakeholder management – stakeholders for the environment can be identified, and interactions planned© 2015 Cengage Learning40The Future of Business: Greening and/or Growing?The salient environmental question: How much is enough?How much economic growth?How much materials and energy?Limits on growth are not popular. But the problem with unrestrained economic growth is that, unless technology or people change significantly within a generation, environment problems will change in degree from significant to severe. © 2015 Cengage Learning41acid rainair pollutionbiodiversitycap and tradecarbon neutralCeres PrinciplesCeres “Roadmap to Sustainability”clean air actClean Water Actclimate changedeforestationecoterroristsemissions tradingEndangered Species Act (ESA)energy inefficiencyenvironmentEnvironmental Impact Statements (EISs)© 2015 Cengage Learning42Key Terms (1 of 2) Environmental Protection Agency (EPA)externalitiesfossil fuelsglobal CompactGlobal Reporting Initiative (GRI)global warminggreenhouse effectMontreal ProtocolNIMBYozoneSuperfundsustainabilitytoxic substancesToxic Substances Control Acttragedy of the commonstriple bottom linewatershedwicked problems© 2015 Cengage Learning43Key Terms (2 of 2)